Do Recent Female Graduates Face Wage Discrimination?

Writing in the Washington Post, Amy Joyce reports on a new study by the American Association of University Women concluding that women "earn 20 percent less than men at the same level and in the same field one year after college graduation." If the study is sound, it undercuts standard explanations for the wage gap based on women working fewer hours or in more family friendly jobs or taking time off for child rearing. Moreover, Joyce reports:

Ten years after graduation, women fall further behind, earning 69 percent of what men earn. A 12 percent gap appeared even when the AAUW Educational Foundation, which did the research, controlled for hours, occupation, parenthood and other factors known to directly affect earnings.

Unfortunately, the study itself is not readily available. I'm not sure why. (Ms Joyce, did you have access to the full report and examine it yourself, or are you relying on the AAUW press release?)

Even if it is only subconscious, discrimination may be the primary cause of both the initial and the subsequent delta. Alternatively, Carnegie Mellon economist Linda Babcock suggests that a significant factor may also be that women are less likely to negotiate effectively or negotiate at all for higher salaries.

Babcock conducted a study in 2002 that looked at starting salaries of students graduating from Carnegie Mellon University with master's degrees. The starting salaries of men were 7.6 percent higher, or almost $4,000 more, on average, than those of the women. It turned out, however, that only 7 percent of the female students had negotiated, but 57 percent of the men had asked for more money. The students who negotiated increased their starting salaries by 7.4 percent on average, or $4,053. That's almost exactly the difference between men's and women's average starting pay.

I can offer only anecdata here, but both my own experiences fresh out of college and my observation of my college age son's job market experience to date suggests to me that few, if any, recent graduates do much serious negotiating unless they are in sufficient demand that they have multiple offers. Still, I certainly don't deny that could be a factor, nor for that matter that discrimination is at play. What else could be at play that might count toward explaining the pay gap immediately out of college? What was available at the AAUW site included the following:

Men and women remain segregated by college major, with women making up 79 percent of education majors and men making up 82 percent of engineering majors. This segregation is found in the workplace as well, where women make up 74 percent of the education field and men make up 84 percent of the engineering and architecture fields.

Okay, so there are over four male engineering or architecture graduates for every female and roughly three female teachers for every male. My guess, and it is only that, is that the education market is more likely to pay a premium for diversity than the engineering or architecture market; that is, that school systems seek male teachers and pay more for them more than engineering firms seek or are willing to pay a premium to have female engineers in their employ. I'd also guess there are far more teachers than engineers in the U.S., so it would be useful to see how those numbers broke down by field of work and how, in turn, they were aggregated to show an average pay gap.

Do I have any evidence for this? Not a whit. Might this sort of possibility be taken into consideration and discounted or otherwise accounted for in this new study? Sure. Conjecture about a study as reported in a newspaper is little if anything more than sheer speculation.

So much for speculation; now for a little ideological ax grinding. Discounting government jobs for which there are pay bands and such, employers are supposed to hire the best people at the lowest salaries acceptable to those employees. Thus, for example, and regardless of general or average differences in the psychological perspectives or negotiating skills of men and women, a prospective employer wishing to hire a well qualified but insecure man and an equally well qualified but highly confident woman will rationally offer the woman more than the man for the same job. That isn't discrimination any more than vice versa; that's business.

So, too, we are often told that, for example, equally qualified black engineers earn less than white engineers. This could be a function of discrimination if only in the sense that a black engineer may believe, correctly or not, that his job opportunities are fewer than his white counterpart and so be willing to work for less. But if a rational employer knew he could hire equally well qualified black engineers for 80% of what he was paying his white engineers, he'd be a fool not to hire black engineers and realize the cost savings until, as it inevitably would, the greater demand for black engineers closed the gap. Now, any number of employers may be both fools and racists (or sexists) but they aren't all discriminating fools. Some capitalist who values profits over people (and isn't that the leftist stereotype of a capitalist anyway?) will jump at the chance of hiring cheaper labor; hence, the outflow of many jobs to foreign, cheaper labor markets. That will in turn pressure his competition to hold down or reduce labor costs, also reducing any gap caused by discrimination.

The point here is that there is a market for employers just as there is a market for employees and both such markets are subject to market forces. Moreover, whatever discrimination may exist in both those markets may just as often be attributable to employee attitudes and dispositions as to such attitudes or dispositions on the part of employers.

Meanwhile, before we all go jumping to conclusions about a sexual pay gap among recent college graduates, might we at least take a look at the study making that claim?